Rite Aid sends mixed messages as Michigan braces for more closures
Rite Aid recently announced 12 Michigan store closings, but workers and health care providers are bracing for the struggling pharmacy chain to shutter more in the state. Linda Parton / Shutterstock.com.
by Paula Gardner (Bridge Michigan)
Communities across Michigan are bracing for the impact of a wave of Rite Aid closings — which may affect all 185 stores in the state — as one of the largest pharmacies in the U.S. cuts costs in a fight for survival.
The drugstore chain this week disclosed 12 Michigan stores slated to close as part of its bankruptcy reorganization, on top of 19 closures the company announced when it sought Chapter 11 protection in October 2023.
While Rite Aid has sent mixed messages about the fate of its other Michigan locations, a local union representing more than four dozen stores is expecting mass closures.
All Michigan stores will close “probably by the middle of September,” John Cakmakci, president of United Food and Commercial Workers Local 951 in Kentwood, told Bridge Michigan on Friday.
The union represents about 350 Rite Aid workers in south and west Michigan. It negotiated severance deals for workers, Cakmakci said, and is lining up services to help them find new jobs.
Rite Aid “has been struggling for quite some time, so it wasn’t really a shock to any of us,” Cakmakci said.
Rite Aid did not reply to multiple Bridge requests for comment.
On Thursday, the company reportedly told MLive.com it would close all of its Michigan stores and transfer most prescriptions to Walgreens – but later attempted to retract that statement.
While not surprising, the looming pharmacy closures are disappointing for employees, customers and communities, many of them small towns that face losing a prominent prescription provider.
“For smaller areas that only are served by Rite Aid, they won’t be served by anyone, at least not immediately,” said Joe Gavan, CEO of Cassopolis Family Clinic Network, known as Cass Clinic or CFCN, in southwest Michigan. “So for them, I feel terrible.”
As more Rite Aid stores close, the clinic’s pharmacies in Cassopolis and Niles “will be kind of a safety net for folks in those communities,” Gavan said.
As a Federally Qualified Health Center, CFCN can serve anybody but is designed to be accessible to patients on Medicaid or who cannot afford primary care.
The clinic is expanding hours and may open another pharmacy in the Dowagiac area, Gavan said. “We have a drive-through and, to meet the added demand, we’re adding staff.”
Some of the new hires, he added, may be workers who Rite Aid will lay off.
But concern still exists for other Michigan communities that may have relied on Rite Aid or other pharmacies that are closing. About 7,000 drugstores in the U.S. have closed since 2019, many of them independent operations, as operating costs increase and drug reimbursements decline.
“There’s going to be deserts where pharmacies used to exist,” Gavan said. “It’s heartbreaking for those folks that are going to have to either travel or order prescriptions by mail.”
Employees
While Rite Aid has publicly disclosed plans to close a dozen Michigan stores, Cakmakci, the union official, told Bridge he’s expecting all of the state’s stores to close by the fall, confirming what many workers and their families had been posting on social media over several days.
Some said they had worked at Rite Aid for decades, devoting their careers to the stores, building personal connections over the pharmacy counters that they hate to lose.
“They form bonds,” Cakmakci said of the workers and their customers. “They become friends.”
The Local 951 union represents 47 Rite Aid stores in the west and central portions of the Lower Peninsula, down from about 85 several years ago. A few more in that area are not unionized, he said.
Workers will get severance packages, Cakmakci said, and other companies with workers also represented by the union local are interested in hiring people who face layoffs. The union also will help them find other resources, he said, such as resume writing.
Michigan’s low unemployment rate — 3.9%, equal to that of the U.S. — suggests that many will find new jobs quickly, Cakmakci said.
However, he is concerned that some won’t find work with comparable health insurance plans.
“It’s a sad situation,” Cakmakci said. “We’re doing the best we can with what’s happening.”
Next
Pennsylvania-based Rite Aid nearly tripled its presence in Michigan in the mid-1990s when it acquired 224 pharmacies in the Perry Drug chain.
The chain is the 7th largest drugstore chain in the U.S., last year filling about 2.2% of the nation’s prescriptions.
Most of its 2,100 stores were on the East and West coasts when it filed to reorganize the company due to debt and litigation, including lawsuits over opioid prescriptions. In addition to Michigan, Rite Aid is now also closing stores in Ohio.
Nationwide, retail store closings are up 24% in 2024, according to tracking released in May by CBS News. Pharmacy chain CVS closed 315, about half of the list-leading Family Dollar closings. Walgreens also was in the top 10, with 77. Before this week’s announcement, Rite Aid had closed 165 stores across the country this year.
Rite Aid closings raise questions about the future of the chain’s store locations, most of which are leased. Many, said Jim Chaconas, executive vice president of Colliers Ann Arbor, are in prime locations with high visibility and drive-throughs.
However, many Rite Aid landlords in Michigan also have not received word from the company that they plan to close in the state, Chaconas said. Despite that, the company has been in touch about cutting lease rates.
Deno Bistolarides, managing partner at Encore Real Estate Investment Services in West Bloomfield, said his company has listed and sold dozens of former Rite Aid-leased buildings and other drugstores over the past few years.
Many of the buildings should be leased again quickly, Bistolarides said, given their visibility in high-traffic locations.
“A lot just depends on the location,” he said.
Rite Aid once paid top dollar for their store leases, Bistolarides said, and today they are closing “good, busy stores” that can’t compensate for the chain’s losses from lower insurance reimbursements.
“It’s unfortunate because Rite Aid had such a presence in Michigan for a long time,” Bistolarides said. The new tenants for the stores are more likely to be discount stores or car washes than pharmacies, he added.
“The need for prescription drugs isn’t going to go away,” Bistolarides said. “Access is going to get challenging.”
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